Tensions Growing Ahead of EU Summit

Oct. 20, 2011 - PRLog -- Builders laid the foundation of more houses in the US in September than had been predicted. Consumer inflation rose at the slowest rate in the past three months, thereby supporting the Federal Reserve’s predictions on the rise in economic growth and the slowing of inflation.

The Department of Commerce in Washington reported yesterday that new housing construction increased 15% to 658,000, the highest level since April 2010. The department’s data also showed that the cost of living has risen 0.3% since August and coincided with economists’ average prediction. The increase in construction was supported by the boom in the number of apartments and other multi-family housing units being built. It may continue to buoy the construction industry since the slump in the housing market is turning more and more Americans into renters. Meanwhile, the low inflation is giving the central bank more flexibility in taking additional steps to prop up the weak economy. The figures that the construction market showed in September are truly impressive. Construction of multi-family housing units jumped 51.3% in September compared to the previous month; 233,000 such units have been built in the past 12 months – a high not seen since October 2008. Construction of new single-family homes rose 1.7%, to 425,000 units.

Shares fell at the opening of trading in the Asian markets. Copper prices fell for the fourth day in a row after a schism developed between France and Germany over participation in a rescue plan for Europe. Yesterday, the US Federal Reserve’s Beige Book showed that companies have started to be more pessimistic in their assessments of the outlook for the US economy. The Asia-Pacific MSCI Index fell 0.6% at 9:46AM in Tokyo. Futures on the Standard & Poor’s Index added 0.3%. The Euro rose 0.1% against the dollar to $1.3777 and is trading at 105.85 against the yen, having risen up from 105.69. Copper fell 1.2% to $7129 per ton on the London Metal Exchange, leading an overall negative trend among metals. Oil futures rose 0.3% in New York after falling 2.5% yesterday.

Jean-Claude Juncker, the prime minister of Luxembourg and head of the group of Euro zone finance ministers, signaled that, at an impromptu meeting of European leaders in Frankfurt yesterday, the participants were unable to resolve their differences ahead of the official summit this upcoming weekend. DT Trading analysts think that the dispute between the two leaders of Europe - Germany and France – stems from a desire for each to win more political points from being the one to head up the implementation of a rescue plan for Europe. Also playing a role could be Nicholas Sarkozy’s political ambitions to be not only reelected next year as the president of France, but also to be seen as the informal leader of a united Europe.

DT Trading Limited Analytical Department

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